HSBC's shares rise after Q1 profits beat forecasts

Sumeet Chatterjee and Lawrence White

(Removes extraneous words, corrects syntax in first paragraph)

* Q1 profit before tax $5 bln versus $6.1 bln a year ago

* CET1 ratio at 14.3 pct vs 13.7 pct consensus

* CFO rules out fresh buybacks, dividend raise in short term

HONG KONG/LONDON, May 4 (Reuters) - HSBC Holdings Plc

reported a better than expected first-quarter profit

and capital position on Thursday, boosting the lender's share

price in Hong Kong as the bank seeks to move from restructuring

to growth.

The bank's common equity tier 1 ratio - a key measure of its

financial strength - was 14.3 percent at the end of the March

quarter, up from 11.9 percent in the same period last year and

better than the 13.7 percent expected by analysts.

HSBC's shares rose 2 percent in Hong Kong following the

announcement, outperforming a 0.5 percent drop in the benchmark

Hang Seng index.

HSBC chief financial officer Iain Mackay ruled out a fresh

share buyback in the short term as a means of using some of that

excess capital, after the bank said it completed its previously

announced $1 billion share buy-back in April.

"We've just finished one, we need to catch our breath a

little bit," Mackay told Reuters on Thursday.

Mackay also reiterated the bank's stance that it will hold

its dividend steady for now, quashing shareholders' hopes that

the lender's robust capital levels would see it boost payouts.

HSBC is expected to receive a further capital boost as it

repatriates some $8 billion currently stuck in its U.S.

subsidiary, following approval by the Federal Reserve last year

of its plans to begin the process.

"With a strong capital position, we won't be surprised if

the bank announces another share buy-back in the second half,"

Bernstein analyst Chirantan Barua said in a research note

following the results announcement.


HSBC said pretax profit for the first three months of the

year fell to $5 billion, down from $6.1 billion a year ago but

better than the $4.3 billion expected on average by analysts

according to the bank's own survey.

The profit decline was due to a change in the accounting

treatment of the fair value on its debt and because its year-ago

earnings included the operating results of the Brazil business

that it sold in July, HSBC said.

Revenue in the quarter dropped 13 percent to $13 billion.

However, the bank's adjusted profit before tax, excluding

the exceptional items, rose 12 percent in the quarter to $5.9


Shareholders at the bank's annual general meeting last week

overwhelmingly voted in favour of re-electing Chief Executive

Stuart Gulliver to the lender's board, in an affirmation of his

strategy in recent years to shrink and refocus the bank.

Gulliver and outgoing Chairman Douglas Flint have sought to

unwind much of the empire-building of their predecessors since

their appointments in 2010 - a response to a tough environment

of low interest rates and increased regulation.

In the first quarter HSBC said it had increased customer

lending by 17 percent over the same period last year and assets

under management by 15 percent in China's Pearl River Delta, a

key plank of the management duo's strategy to refocus on Asia.

China's slower than expected growth has caused the lender to

expand more cautiously than planned in the booming southern

region of China.

(Reporting by Sumeet Chatterjee and Lawrence White; Editing by

Edwina Gibbs, Greg Mahlich)